March 8, 2011
BRUCE MENTH, PLAINTIFF-RESPONDENT,
HEARTLAND OSTRICH FARM; SHERWIN DROBNER; ASPEN FALLS, LLC; ASPEN FALLS PROPERTIES, INC.; GOLDBERG REALTY ASSOCIATES, CO.; AND REDBORD FARMS, INC. D/B/A HEARTLAND OSTRICH FARM, DEFENDANTS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-480-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 1, 2010 - Decided
Before Judges Axelrad, Lihotz and J. N. Harris.
Defendants appeal from an order denying their application for attorneys' fees to be paid by opposing counsel pursuant to Rule 1:4-8, after plaintiff's complaint was dismissed at the close of his case. Defendants maintain plaintiff's counsel "used the [p]laintiff in pursuing a flawed cause of action for wrongful termination based on the Conscientious Employee Protection Act [(CEPA), N.J.S.A. 34:19-1 to -14], for her own financial gain." Judge Buchsbaum, who presided over the truncated jury trial, considered defendants' fee request and denied the application. The written statement of reasons supporting the court's determination found plaintiff and his counsel "possess[ed] a reasonable and good faith belief as to the merits of th[e] case." The judge noted three motions for summary judgment had been denied and he had "made it abundantly clear at trial, that [the court] continued to believe summary judgment had been properly denied."
On appeal, defendants contend a sanction in the form of a counsel fee award was improperly denied because plaintiff's allegations were without evidentiary support and the litigation was conducted in a manner that needlessly increased its cost.
Following our review of these arguments, in light of the record and the applicable law, we conclude Judge Buchsbaum did not abuse his discretion. Accordingly, we affirm.
Plaintiff was employed as a maintenance supervisor at the Aspen Falls apartment complex in Aspen Falls, Pennsylvania, which was owned by defendant Sherwin Drobner. Drobner also owned Heartland Farms, LLC (Heartland), an ostrich farm in Hamilton Township. When Heartland commenced business, plaintiff had performed several maintenance tasks for it, in addition to his responsibilities at the apartment complex.
On November 2, 2002, plaintiff went to Heartland to retrieve a snow blower needed at the apartment complex. Plaintiff encountered nineteen dead ostriches. The day after he visited the farm, plaintiff called Drobner but received no answer. Plaintiff called Drobner a second time, again without success. The message plaintiff left his employer did not mention the dead ostriches.
Plaintiff returned to Heartland on December 9, 2002, "to see what was going on." He found more dead birds, took more pictures, and tried to provide food and water for the live birds, but was unsuccessful because the barn was locked.
Plaintiff then notified The Trentonian, a local newspaper, stating "the birds should have been better taken care of, and [he] didn't like what [he saw]." Plaintiff provided the reporter with Heartland's address and the pictures he had taken. The Trentonian reports alerted the Society for the Prevention of Cruelty to Animals (SPCA). Officer John Micklewright went to Heartland to inspect the dead ostriches, and determined there was no food or water in the ostrich pen. As a result of the SPCA investigation, Drobner and Heartland's manager were charged with animal cruelty.*fn1
One month later, plaintiff was terminated from his position, prompting his filing of this matter. Plaintiff's complaint alleged defendants' wrongfully terminated him in retaliation for his disclosure. Discovery commenced and plaintiff's deposition was held. Thereafter, defendants sent correspondence to plaintiff asserting the CEPA claim was frivolous and warned they intended to seek counsel fees if they ultimately prevailed.
Defendants moved for summary judgment, which was denied. Discovery continued, and defendants again moved for summary judgment. The same motion judge considered the application and again denied the request, finding plaintiff had "established a prima facie CEPA claim."*fn2 A third summary judgment motion was filed by defendant. A different motion judge determined the application was premature as discovery had not been completed.
Plaintiff subsequently sought a substitution of counsel, changing to his current attorneys, which initiated that judge's recusal. No formal order on the third summary judgment motion was entered. Defendants requested a change in venue and the matter was transferred to Hunterdon County on August 10, 2009.
Defendants' fourth motion for summary judgment was presented to Judge Buchsbaum. In his review, the judge stated defendants motion "simply repeat[ed] prior unsuccessful arguments" and determined plaintiff had set forth a prima facie case and demonstrated the existence of disputed material facts. The court found "no reason to disturb the earlier rulings by other courts" and denied defendants' motion.
Trial commenced on March 3, 2010. The following day, at the close of plaintiff's case, defendants' motion for a directed verdict, R. 4:37-2(b), was granted and plaintiff's case was dismissed.
Defendants sought payment of counsel fees, asserting plaintiff's action was frivolous, pursuant to N.J.S.A. 34:19-6. Additionally, defendants moved for the imposition of sanctions against plaintiff's counsel based upon Rule 1:4-8. Plaintiff had filed a voluntary petition under Chapter 7 of the Bankruptcy Code. Consequently, the automatic stay, 11 U.S.C. 362(a), prohibited the court from determining defendants' claims under the statute, leaving only the question of whether sanctions against plaintiff's counsel were warranted.
In its memorandum of decision, the court stated:
Here both counsel for the plaintiff could possess a reasonable and good faith belief as to the merits of this case. . . . Here the courts denied three motions for summary judgment. The defendants cannot use this motion for fees as an opportunity to replay their denied motions for summary judgment.
Yet that is what they do at great length . . . . The defendants rely on this [c]court's order dismissing the plaintiff's claim at the end of his case. However, "[t]hat some of the allegations made at the outset of litigation later proved to be unfounded does not render frivolous a complaint that also contains some non-frivolous claims." [United Hearts, L.L.C. v. Zahabian, 407 N.J. Super. 379, 390 (App. Div.), certif. denied, 200 N.J. 367 (2009)]. Here the plaintiff stated a prima facie case, but this case proved insufficient at trial.
The [c]court made it abundantly clear at trial that it continued to believe summary judgment had been properly denied. It was clear that plaintiff's testimony was far weaker than anticipated. Such occurs from time to time. However, that circumstance does not justify an award of fees. To penalize a lawyer because the client's trial testimony falls short goes well beyond the language or purpose of R[ule] 1:4-8. Therefore his complaint was not frivolous and sanctions are inappropriate.
An order was entered denying defendants' motion and this appeal ensued.
Defendants argue the trial court erred in failing to award sanctions, contending the complaint's allegations lacked evidentiary support and opposing counsel acted in a manner that needlessly increased the cost of litigation. We are not persuaded by these arguments.
Rule 1:4-8 provides in pertinent part:
(a) . . . The signature of an attorney . . . constitutes a certificate that the signatory has read the pleading, written motion or other paper. By signing, filing or advocating a pleading, written motion, or other paper, an attorney . . . certifies that to the best of his or her knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) the paper is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;
(3) the factual allegations have evidentiary support or, as to specifically identified allegations, they are either likely to have evidentiary support or they will be withdrawn or corrected if reasonable opportunity for further investigation or discovery indicates insufficient evidentiary support[.]
"A court may impose sanctions upon an attorney if the attorney files a [frivolous pleading] . . . and fails to withdraw the paper within twenty-eight days of service of a demand for its withdrawal." United Hearts, supra, 407 N.J. Super. at 389 (citing R. 1:4-8(b)(1)). Sanctions are not to be issued lightly; they are reserved for particular instances where a party's pleading is found to be "completely untenable," or where "no rational argument can be advanced in its support[.]" United Hearts, supra, 407 N.J. Super. at 389. Simply because "some of the allegations made at the outset of litigation later prove to be unfounded does not render frivolous a complaint that also contains  non-frivolous claims." First Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 432 (App. Div. 2007) (quoting Iannone v. McHale, 245 N.J. Super. 17, 32 (App. Div. 1990)).
Throughout the pendency of this matter, defendants' dogged defense was met by plaintiff's tenacious trial tactics. In reviewing the summary judgment motion filed immediately before trial, Judge Buchsbaum thoroughly considered the evidence and concluded plaintiff's factual allegations provided prima facie proof of each element of his CEPA claim, and rejected defendants' insistence that there was no factual or legal basis to award relief. Although the most tenuous proofs related to causation, that is, proof that plaintiff's termination was causally connected to his report of the abused birds, and notice to the employer, as mandated by N.J.S.A. 34:19-4, the court recognized the factual disputes as sufficient to defeat summary judgment.
"In our judgment, a pleading cannot be deemed frivolous as a whole nor can an attorney be deemed to have litigated a matter in bad faith where, as in this case, the trial court denies summary judgment . . . and allows the matter to proceed to trial." United Hearts, supra, 407 N.J. Super. at 394. Under these circumstances, Judge Buchsbaum's denial of sanctions was an appropriate exercise of the court's reasoned discretion. First Atl., supra, 391 N.J. Super. at 426. We do not second-guess the exercise of sound discretion by a trial judge because we recognize "[j]udicial discretion connotes conscientious judgment, not arbitrary action; it takes into account the law and the particular circumstances of the case before the court." Higgins v. Polk, 14 N.J. 490, 493 (1954).